BUDGET FY22-2023- IMPACT ON INFRASTRUCTURE SECTOR

PM Gatishakti: PM GatiShakti Program to be driven by seven sectors which includes Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. The projects pertaining to these sectors in the National Infrastructure Pipeline will be aligned with PM GatiShakti framework.

Road Construction: The government is targeting to expand national highways (NH) network by 25,000 km in FY23 i.e. at rate of 68.5 km/day (vs 22.5 km/day of NH construction reported during April-December’21 by MoRTH). Overall allocation to NHAI has improved to 134,015 crore in FY23E (Rs.57,350 crore/ Rs.65,060 crore in FY22 BE, FY22RE respectively). Additionally, Rs.20,000 crore is likely to get mobilized through innovative ways of financing to complement the public resources. This is positive for road developers such as KNR constructions, PNC Infratech, HG Infra Engineering, Ashoka Buildcon among others in coverage.

River Linking Project: Implementation of the Ken-Betwa Link Project at an estimated cost of Rs.44,605 crore will be taken up in FY23. The government has allocated Rs.4,300 crore in FY22 RE and Rs.1,400 crore in FY23E for this project. Additionally, Draft DPRs of five river links, namely Damanganga-Pinjal, Par-Tapi-Narmada, Godavari-Krishna, Krishna-Pennar and Pennar-Cauvery have been finalized. The implementation of river linking project is positive for infrastructure related companies such as NCC Ltd, KNR Constructions, among others in coverage.

Har Ghar, Jal se Nal: The government has allocated Rs.60,000 crore under “Jal se Nal” scheme with an aim to cover 3.8 crore households in FY23 (Rs.50,011 crore/ Rs.45,011 crore in FY22 BE, FY22RE respectively). This positive for PNC Infratech, HG Infra, NCC Ltd among others in coverage.

Housing for All:PM Awas Yojana (rural and urban) is allocated Rs.48,000 crore during FY23E (vs Rs.27,500 crore/ Rs. 47,390 crore in FY22 BE, FY22RE respectively). Positive for NCC Ltd in our coverage.

Railways: 2,000 km of rail network to be brought under indigenous technology KAWACH for safety and capacity augmentation. 400 new generation Vande Bharat trains to be manufactured in next 3 years.

Overall capex: The outlay for capex has been stepped up sharply by 35.4% from Rs.5.54 lakh crore in FY22 to Rs.7.50 lakh crore in FY23E. This outlay in FY23E will be 2.9% of GDP (vs 2.5% of GDP in FY22).  Considering an investment to be made for creation of capital assets through Grants-in-Aid to States, the Effective Capex of the Central Government is estimated at Rs.10.68 lakh crore in FY23, which will be ~4.1% of GDP. Positive for overall Infrastructure and Capital goods sector